“Buying REO properties in bulk provides investors with the ability to purchase REO properties at a fraction of the cost in an environment where they could not get anywhere close to the terms and pricing they want on their own,” said Beth Jo Zeitzer, President / Designated Broker of R.O.I. Properties. “We specialize in helping commercial investors meet their needs and avoid the hassles involved in the bulk buying process.”

The size and capitalization of a group brings tremendous credibility to the table since the group can provide multiple exit strategies for the properties. Buyers can invest in REO properties without the hassles of going to auctions, contacting banks, probate sales, estate sales, etc.

According to real estate expert Robert Kline of RW Kline, LLC, there are many advantages associated with investing in commercial real estate in bulk. The first is that preventing retail foreclosures benefits the tenants and their business. The foreclosure process takes months and can result in temporary maintenance, security and insurance problems while the property changes hands. Secondly, the government does not have formal help for commercial loan modifications, although there is money from the Troubled Asset Relief Program to offset losses from bad commercial loans. In addition, the national commercial mortgage debt currently exceeds 3.5 trillion dollars, and two-thirds of securitized mortgages due today have no hope of being repaid in the near term.

Over the past 8 months, from January 1, 2009 to September 1, 2009, there have been a total of 352 commercial REO sales transactions for a total of over $ 1 billion. That is a more than 30% decline over the same 8-month period in 2008, when the transactions resulted in a sales volume of more than $ 1.4 billion (Costar).

R.O.I. Properties is a full service real estate brokerage firm specializing in foreclosure properties in Arizona, bankruptcies, probate properties and more. R.O.I. works with banks, lenders, asset managers, bankruptcy attorneys, receivers, fiduciaries and turn around professionals to sell their distressed real estate assets, both residential and commercial.

Contributing Writer: Marcela Houser

Marcela Houser, CCIM, is part of R.O.I. Properties’ Commercial Distressed Assets Division. Marcela has been working in commercial real estate for eight years, with a specialization in retail and office leasing and sales. She is bilingual, and brings a wealth of experience in facilitating transactions with users, owners and investors.

A previously undetected title flaw has been discovered on many previously foreclosed properties. As the number of real estate foreclosures skyrockets, the odds are higher that a home you live in today, or at some point in the future may have had a foreclosure in its history. Even if the foreclosure has long since passed, a loophole in the way mortgages are recorded can create a serious title defect for future owners. Title analysis performed this month by AFX Title has detected this error to be common in random samples of properties it reviewed. “This could affect the property ownership of millions of homes nationwide” said David Pelligrinelli, of AFX Title. “The mortgage recording method which created this title flaw did not exist until recently. As title abstractors are just seeing this problem emerge now but a wave of title claims is coming over the next year or so.”

The problem is created through a break in the chain of mortgage ownership. Until the 1980s, most mortgages were loans between the homeowner and a bank, who lent the money directly. More recently, the mortgage financing system transformed into an international system of securitization, with mortgage lenders packaging their loans into securities, bought and sold by investors like stocks. These transactions even split individual mortgages into sections, where each loan could have parts owned by different investment banks.

The transfer of ownership in these mortgage backed securities (MBS) was done with contracts on the balance sheets of Wall Street investment banks, such as Morgan Stanley and Goldman Sachs. The company who originally appeared to make the loan was normally a retail lending company such as Countrywide or Lending Tree, who typically acted as a sales company, and sometimes remained contracted to service the loan.

In the event that the loan goes into foreclosure at a later date, the then-current owner of the loan files the foreclosure and sells the property to a new owner, often at auction. The land records would show a deed of transfer from the investment bank to the new owner. This creates a break in the chain of ownership of the mortgage rights. In many cases, the transfer of ownership of the mortgage loan has gone from the original lender, through several owners, and then to the foreclosing bank, none of which is recorded on the property title history. Technically, the foreclosing bank has no recorded title rights to foreclose in the first place. Owners of the loan normally do not publicly record each of the transfers out of expediency, and cost. Filing a document of transfer (called an assignment) in the land records incurs a substantial fee paid to the county clerk.

Some delinquent homeowners have used this error to delay the foreclosure, forcing lenders to produce the note. In these cases, the bank has to go through the process of getting assignments to the foreclosing bank after the fact. However, the title repair process is not required however in the majority of cases when the homeowner does not contest the foreclosure.

This leaves the break in chain of title dormant in the property records, vulnerable to be contested in the future. A few largely overlooked cases have already been decided by courts on this issue. In Lowell MA, a judge invalidated the foreclosure of homes based on missing and out-of-order assignments (US Bank v Ibanez).

Unraveling the chain of title and clarifying ownership of loans will create challenges for the courts and legislative bodies in all states. In the meantime, homeowners and buyers should be aware of how this could affect their property title. There are reports that some title insurers are indicating that they will not insure for this title defect.

As a national provider of property title searches, AFX Title is seeing an increasing number of files where the chain of title has obvious gaps in the recorded mortgage assignments. According to Pelligrinelli, the issue is serious. When running searches for clients, we are noticing that a significant number of previously foreclosed properties have unconnected chain of assignments in the mortgage history. This could represent a title defect which could technically affect ownership rights for future owner.

Pelligrinelli adds that some lenders and government institutions are rushing to repair the titles on lender-owned properties as they discover them in their portfolio. This does not help individual owners who own properties previously foreclosed.

MBA Commercial, one of San Diegos premiere commercial real estate brokers, has cash buyers available to relieve commercial real estate owners of unserviceable debt. Owners can save their credit by participating in a short sale versus a foreclosure. Lenders net approximately 15-20% more through a short sale than a foreclosure, providing them with incentive to satisfy a larger portion of debt.

According to MBA Commercial CEO Brian Yui, MBA Commercials access to ready buyers and ability to quickly and efficiently complete short sales on behalf of distressed property owners can significantly reduce damage to credit.

As MBA Commercial, Inc. predicted in late 2009, the wave of commercial foreclosures in San Diego is increasing. Researcher Real Capital Analytics Inc. reported that at the end of March 2010, San Diego County had 120 commercial loans in delinquent or default status, with a total value of $ 1.8 billion. According to Bloomberg L.P., in the first quarter of the year, 24.9% of San Diegos commercial mortgage backed securities loans were on watch lists as lenders anticipated near-term delinquencies. In response to this growing need, MBA Commercial has established a short sale unit comprising experienced negotiators and closers dedicated to assisting commercial property holders dispose of their non-performing assets.

The model is similar to residential short sales: For commercial owners carrying debt higher than the current value of their properties, MBA Commercial can provide a cash buyer for fair market value. MBA then negotiates with the lender to release the owners note for the value of the sale, even though the owner owes more than the property is worth. The owner of the building avoids foreclosure and the bank avoids the legal fees and carrying cost associated with a foreclosure. The lender ultimately nets more money and avoids the risk of taking title to the property.

In addition to short sales, MBA Commercial specializes in short payoffs. The company has bridge financing lenders who are able to loan the majority of loan payoff amounts. Bridge financing costs are generally two to five points with interest rates ranging from 12-15% depending upon securitization and assumption of risk. Much like choosing a short sale over foreclosure, short payoffs can save a commercial property owners credit as well reducing or eliminating personal guarantees.

MBA Commercial has long anticipated the downturn in San Diegos commercial property market and is now poised to assist owners in debt while generating profits for investors. Says Yui, These individuals become free of the debt they can no longer service and the properties are restored to profitability, benefiting the local economy. Its a win-win, something we dont often see in the current market.

MBA Commercial, Inc. is a leader in San Diego commercial real estate. MBA Commercial offers a turn-key solution for property management, leasing, sales and financing. Its new Short Sale Division provides bridge loans as well as short sale opportunities for commercial property owners. For further information, please call 888-248-6222.

Clopton Capital is a nationwide industrial genuine estate finance firm that arranges and resources industrial home loans for all income producing qualities. The organization funds its financial loans by means of insurance policies organizations, cmbs securitizations, and banks.

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Clopton Money ranks as one of the most lively and dynamic business actual estate finance corporations offering lending options nationwide for cash flow making homes. Offering professional mortgages, construction loans, bridge financial loans, and CMBS loans to borrowers for a various selection of house sorts and ownership structures, Clopton Cash has the ability to fulfill almost any lending wants of house proprietors and administrators.